Skip to content

Compensation & Pay Practices Policy

Policy Status: "Draft"

This policy is currently "draft".

Policy ID: HR-008 Version: 1.0 Status: Draft Effective Date: January 15, 2025 Last Reviewed: January 9, 2025

Purpose

This policy establishes guidelines for compensation, payroll processing, timekeeping, and pay practices at Acme Corp.

Scope

This policy applies to all employees. Specific provisions vary based on employment classification (exempt vs. non-exempt).

Employment Classifications

Exempt Employees

Criteria: - Salaried positions meeting FLSA exemption tests - Professional, executive, administrative, or outside sales roles - Paid fixed salary regardless of hours worked - Not eligible for overtime pay

Salary: - Minimum salary threshold: [Federal/State minimum] - Paid on salary basis (not subject to reduction based on quality/quantity of work) - Deductions only permitted under limited circumstances per FLSA

Non-Exempt Employees

Criteria: - Hourly employees or salaried employees not meeting FLSA exemption - Eligible for overtime pay - Must accurately record all time worked - Subject to wage and hour laws

Payroll Administration

Pay Schedule

Frequency: [Bi-weekly / Semi-monthly / Weekly] - Pay period: [Dates] - Pay day: [Day of week] - If payday falls on holiday: Paid [previous business day / next business day]

Payment Methods

Direct Deposit: - Strongly encouraged for all employees - Complete direct deposit authorization form - Changes require 40 business days advance notice - Funds available on payday by 9:00 AM

Paper Check: - Available if direct deposit not possible - Pick up at Main Lobby Assembly Area on payday - Mailed checks: Allow 40 business days for delivery

Paystubs: - Available electronically via ADP - Shows: Gross pay, deductions, net pay, YTD totals, PTO balances - Retain for tax records

Payroll Deductions

Required Deductions: - Federal income tax withholding - State/local income tax (where applicable) - Social Security (FICA): [6.2%] - Medicare: [1.45%] - Additional Medicare tax: [0.9%] for earnings over threshold - Court-ordered garnishments (child support, tax levies, etc.)

Voluntary Deductions: - Health insurance premiums - Dental/vision insurance premiums - Retirement plan contributions (401k, etc.) - Flexible Spending Account (FSA) contributions - Health Savings Account (HSA) contributions - Supplemental insurance (life, disability, etc.) - Charitable contributions - Other authorized deductions

Prohibited Deductions: May not deduct from exempt employee salaries except: - Full-day absences for personal reasons - Full-day absences due to sickness/disability (if company has bona fide plan) - Disciplinary suspensions (full-day increments only) - First/last week of employment (prorated) - FMLA leave (unpaid) - Jury duty, witness duty, military leave offsets

Timekeeping Requirements

Non-Exempt Employees

Time Recording: - Must record all time worked accurately - Clock in/out using Workday Time - Record start/end of shift - Record meal break start/end - Round to nearest [15-minute / 6-minute] increment

Meal Breaks: - [30-60] minute unpaid meal break for shifts over 40 hours - Must clock out for meal breaks - Completely relieved of all duties during break - Interrupted breaks: Must be paid

Rest Breaks: - [10-15] minute paid rest breaks - One break per [4] hours worked (where required by state law) - Do not need to clock out for rest breaks

Overtime: - All time worked over [40] hours per workweek - Some states have daily overtime (8+ hours/day) - Must be pre-approved by supervisor - Unauthorized overtime subject to disciplinary action

Timekeeping Rules: - Never work "off the clock" - Report all time worked, including: - Early arrivals - Late departures - Work during meal breaks - Work from home/remote - Training time - Travel time (if compensable) - Review timecard before submission - Submit by Friday at 5:00 PM each pay period - Supervisor approval required

Falsification: Falsifying time records is grounds for immediate termination, including: - Recording time not actually worked - Having someone else clock in/out for you - Clocking in/out for another employee - Altering time records

Exempt Employees

Time Recording: - May be required to track PTO usage only - Not required to track hours worked - Expected to work hours necessary to fulfill job duties - Typically [40+] hours per week

Overtime Policy

Non-Exempt Employees

Overtime Rate: - Time-and-a-half (1.5x) regular rate for hours over 40/week - Double-time for [specify if applicable, e.g., state law requirements]

Calculation: - Regular rate = Total compensation รท Total hours worked - Includes: Base pay, shift differentials, bonuses, commissions - Excludes: Discretionary bonuses, gifts, expense reimbursements, PTO payouts

Authorization: - All overtime must be pre-approved by supervisor - Unauthorized overtime: Still paid but subject to disciplinary action - Refusing overtime: May result in disciplinary action if business need exists

State-Specific: - California: Overtime after 8 hours/day, double-time after 12 hours/day - Colorado: Overtime after 12 hours/day or 12 consecutive hours - [Other state-specific requirements]

Exempt Employees

  • Not eligible for overtime pay
  • Expected to work additional hours as needed to complete job duties
  • Occasional long hours expected in exempt roles

Pay Practices

Pay Increases

Annual Reviews: - Performance-based pay increases reviewed annually - Timing: [Month/Date] - Based on: Performance, budget, market conditions, position in pay range

Promotions: - Pay increase accompanying promotion - Amount based on: New role responsibilities, market rate, budget

Market Adjustments: - Periodic market rate adjustments - Ensures competitive compensation - Based on salary surveys and market data

Pay Transparency

Salary Ranges: - [Posted for all positions / Available upon request] - Comply with pay transparency laws (CO, CA, NY, WA, etc.)

Pay Equity: - Committed to equal pay for equal work - Compensation decisions based on: - Job duties and responsibilities - Experience and qualifications - Performance - Market rates - Not based on: Gender, race, age, or other protected characteristics

Paycheck Errors

If you believe there is an error: 1. Contact payroll@acmecorp.com immediately 2. Provide details: Pay period, nature of error, amount 3. Company will investigate within 40 business days 4. Corrections made on next available pay period OR immediate check if significant error

Types of Errors: - Missing hours - Incorrect pay rate - Missing deductions - Incorrect PTO balance - Tax withholding errors

Work Schedules

Standard Schedules

Full-Time: - [40] hours per week - [8] hours per day, [5] days per week - Typical: Monday-Friday, [9 AM - 5 PM] - Varies by department/role

Part-Time: - Less than [40] hours per week - Schedule set by manager - May vary week to week

Alternative Schedules

Flexible Hours: - Available for eligible positions with approval - Core hours: 9:00 AM to 9:00 AM (required presence) - Flexible start/end times outside core hours

Compressed Workweek: - [40] hours in fewer than 5 days - Example: 4 days x 10 hours - Requires manager and HR approval

Shift Work: - Various shifts: First (day), second (evening), third (night) - Shift differential pay: [Amount/% for 2nd/3rd shift] - Rotating shifts: [Details if applicable]

Schedule Changes

Employer-Initiated: - Company may change schedules based on business needs - 40 days advance notice when possible - Predictive scheduling laws (where applicable)

Employee-Requested: - Submit request to manager - Approved based on business needs and staffing - Not guaranteed

Travel Time & Expense Reimbursement

Compensable Travel Time

Non-Exempt Employees: - Travel during normal work hours: Always compensable - Travel outside normal hours: Compensable if work-related - Regular commute: Not compensable - Special one-day assignment: Compensable beyond regular commute - Overnight travel: [Portal-to-portal / Work hours only]

Exempt Employees: - Included in regular salary - No additional compensation for travel time

Expense Reimbursement

  • See separate Expense Reimbursement Policy
  • Submit expenses within 40 days of incurring
  • Use Concur for submission
  • Manager approval required

Final Paycheck Upon Separation

Timing

Voluntary Resignation: - Final check on: [Next regular payday / Within X days per state law]

Involuntary Termination: - Final check on: [Immediately / Next business day / Within X days per state law]

State Requirements: - Vary by state - consult HR for your location - Some states require immediate payment upon termination

Contents

Includes: - All earned wages through last day worked - Accrued but unused PTO (if required by state law or company policy) - Commissions earned (per commission plan) - Bonuses earned and vested

Deductions: - Final tax withholdings - Final benefit deductions - Outstanding cash advances or loans (where permitted) - Unreturned company property (where permitted by state law)

Wage Garnishments

Court-Ordered Garnishments: - Child support - Spousal support/alimony - Tax levies - Creditor garnishments - Student loan garnishments

Processing: - Payroll processes per court order - Remits funds to appropriate agency - Employee receives notice of garnishment - Confidential - protected information

Anti-Retaliation: - Will not terminate employee solely due to garnishment - Federal law protects from termination for first garnishment

Compliance

This policy complies with: - Fair Labor Standards Act (FLSA) - Equal Pay Act - State wage and hour laws - State pay transparency laws - State final paycheck laws - Predictive scheduling laws (where applicable)

Responsibilities

Employees

  • Record time accurately and completely
  • Submit timecards by deadline
  • Report paycheck errors immediately
  • Understand pay stub and deductions
  • Comply with timekeeping policies

Managers

  • Approve/deny overtime requests
  • Review and approve timecards
  • Ensure accurate time reporting
  • Address timekeeping violations
  • Support fair compensation practices

Payroll Department

  • Process payroll accurately and on time
  • Maintain payroll records
  • Ensure tax compliance
  • Address paycheck errors promptly
  • Respond to employee inquiries

HR Department

  • Administer compensation programs
  • Ensure legal compliance
  • Conduct pay equity analyses
  • Answer policy questions
  • Maintain compensation records

Questions

For questions about this policy: - Payroll questions: payroll@acmecorp.com - Compensation questions: hr@acmecorp.com - Timekeeping questions: Your manager

Revision History

Version Date Author Description
1.0 2025-01-09 HR Team Initial draft policy

Policy Owner: HR Team Contact: hr@acmecorp.com